5 min read
Updated on Apr 30, 2023
The best part about insurance is that it offers a huge variety of policies/plans to an individual, ensuring complete financial protection in different situations of life. One such example is the professional liability insurance policy. Here we discuss what it is and how it helps an individual. Read on to learn more.
Professional indemnity insurance is a type of insurance plan is specifically designed to offer financial coverage to individuals against certain professional risks as well as legal costs. For this reason, it is also sometimes referred to as Errors and Omissions (E&O) Insurance. To put it simply, in case any third party suffers any harm, physical injury (even causing death) or property damage on account of a faulty professional service or advice offered by the person insured under the policy, the Professional Liability Insurance plan comes to the rescue.
The most commonly affected individuals in such cases are generally professionals such as doctors, lawyers, chartered accountants, architects, and the like. A number of professional organizations also avail protection under the indemnity insurance cover, such as law firms, hospitals, BPO centers, and more.
On grounds of malpractice, negligent behavior, or unprofessional attitude in delivery of service to a third party, the insured can be legally sued in a court of Indian law. This is when the Professional Liability Insurance offers coverage for any legal expense that may be incurred due to any omissions, negligence, or errors in the service rendered by a professional, directly impacting a third party by way of property damage or physical harm/injury.
The following are 3 key features of this cover:
As stated above, this protection cover is specifically meant for professionals involved in rendering services to people of some kind. This would include lawyers, doctors, engineers, architects, counselors, financial advisors, chartered accountants, management consultants, and the like. Their profession involves giving advice or assisting people by way of some professional service.
As is human, sometimes the service delivered by a professional may involve some negligence, omission, error, or even malpractice or unethical/unprofessional behavior. Moreover, on account of any of these, a third-party (recipient of the service) may suffer physical harm or injury, or damage to property (in case of architects).
In such cases, the professionals, who are also the insured under the plan, can be legally sued by the third party. All legal expenses and liabilities can therefore be borne under the Professional Liability or Indemnity Insurance.
Now let’s take a quick look at what is not covered under this protection plan:
We discussed above who is eligible to apply for this insurance cover and what all is not included under the plan. Now let’s quickly understand how to file a claim under the Professional Liability Insurance cover plan.
Here are the simple steps required to claim coverage under the policy:
Considering its dire need in the professional services industry, several leading insurance companies in India are now offering Professional Liability Insurance to customers. A few of the names that are popular in this insurance category include:
Read More: What Is GIPSA & How Does It Work?
Professional Liability or Indemnity Insurance is a boon to small business owners rendering professional services to individuals. Since making errors is only human, there is always the likelihood of a mistake when it comes to delivering a service. In case of any harm caused to the third party on account of the error made by the insured during service delivery, a legal case can be ensued against the latter. The indemnity insurance policy thereby provides protection and financial coverage in such situations.
Also read: Why Should You Buy an Indemnity Health Insurance Plan
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